The Directors present their Ninth Annual report and Audited Financial Statements for the year ended 31 March 2016.
The Board at its meeting held on 9 March 2016 declared an interim dividend at the rate of Rs. 50 per share (500%) for the year ended 31 March 2016, which was paid to all the eligible shareholders as on 17 March 2016, being the record date for the purpose of dividend. The amount of dividend and the tax thereon to the extent applicable aggregated to Rs. 1,741.38 crore.
The directors now recommend for consideration of the shareholders at the ensuing annual general meeting, payment of final dividend at the rate of Rs. 5 per equity share (50%) for the financial year ended 31 March 2016. The amount of final dividend and tax thereon to the extent applicable aggregate to Rs. 174.13 crore.
For the year ended 31 March 2016, the total dividend including interim dividend, therefore, works out to Rs. 55 per share (550%) and the total dividend and tax thereon to the extent applicable aggregate to Rs. 1,915.51 crore.
For the year ended 31 March 2015, dividend paid was Rs. 50 per share (500%). The amount of dividend and the tax thereon to the extent applicable aggregated to Rs.1,734.57 crore.
The paid up equity share capital as on 31 March 2016 was Rs. 289.37 crore. There was no public issue, rights issue, bonus issue or preferential issue, etc. during the year. The Company has not issued shares with differential voting rights, sweat equity shares, nor has it granted any stock options.
Detailed information on the operations of the Company and details on the state of affairs of the Company are covered in the Management Discussion and Analysis Report.
Capacity expansion and new projects
The Company’s current installed capacity is 6.06 million units per annum. The Company plans to increase the installed capacity to around 6.24 million units per annum by March 2017.
Detailed information on the quadricycle RE 60 and new projects, is provided in the Management Discussion and Analysis Report.
Research and Development and technology absorption
Many new products have been launched during the year under review. Detailed information on the new products is covered in the Management Discussion and Analysis Report.
R&D has been working on improving its operations in a number of areas as listed below:
-Manpower: R&D has been expanding its team size in areas of design, analysis and validation in order to keep up with the rapidly expanding aspirations of the Company.
-Facilities: R&D continued to enhance its design, computing, prototype manufacturing and validation facilities. A number of new test facilities and prototyping facilities were added.
As in the past, new and improved technology has been introduced during the year under review and the detailed information on the same is covered in the Management Discussion and Analysis Report.
The expenditure on research and development during 2015-16 and in the previous year was:
Conservation of energy
Company continues its efforts to reduce and optimise energy consumption at all manufacturing facilities, including corporate office at Pune.
Significant reduction in energy consumption has been achieved as set out below:
A) Electrical energy
l Micro mapping of equipments for energy consumption and countermeasures thereon.
l Lifecycle cost analysis and countermeasures at centralised coolant system.
l Installation of DC brushless motor with direct drive in place of AC induction motor at paint shop air supply unit.
l Reduction in emission height of exhaust blowers.
l Use of electrical blower in place of pneumatic vacuum blower at de-watering stage in paint shop.
l Installation of energy efficient pumps/motors, equipments, air dryers, exhaust blowers axial fans.
l Use of induction/LED/CFLs for street lighting/shop lighting/office.
l Use of auto shut off coolant pumps in machine shop to prevent excess pump loads.
l Use of isolator switches for standby transformers for reduction of fixed load.
l Providing portable compressor for jig stripping plant for non-working days.
l Installation of breeze air coolers in record room in place of air circulators.
l Use of HVLS (High Volume and Low Speed) fans for fixed load reduction of air circulators.
l Reuse of treated water by using reverse osmosis plants.
l Use of auto close water taps and orificing for controlled consumption of water at wash basin.
l Installation of water meters for monitoring and controlling consumption of key users.
l Use of ETP/STP water for gardening and toilet flushing.
l Rain water harvesting at all plants.
l Thermal imaging audit to assess the heat losses through paint shop ovens and countermeasures on them.
l Extending incinerator heat for backing ovens.
l Removable hook arrangement for multi models for fuel tank jigs.
l Reducing colour change time from 11 min to 5 min/occurrence.
l Optimisation of air velocity in ovens.
l Burner efficiency improvement through magnetic resonators.
l Provision of air curtains at oven exit to reduce heat loss.
l Weight reduction of job fixtures in heat treatment.
l Operation of lower size oven in heat treatment.
l Usage of solar water heaters for canteen.
D) Utilisation of renewable energy - key initiatives
l Use of solar energy through solar concentrator.
l Installation of natural light transparent roof sheets.
Bajaj Auto continues to be India’s No.1 exporter of motorcycles and three-wheelers. It exports to
74 countries and enjoys the No.1 or No.2 position in more than 20 of them. During the year under review, exports accounted for 43.9 % of the Company’s net sales. Detailed information on the International Business is given in the Management Discussion and Analysis Report.
Foreign exchange earnings and outgo
The Company continued to be a net foreign exchange earner during the year.
Total foreign exchange earned by the Company during the year under review was H 9,404.55 crore, compared to H 9,443.51 crore during the previous year.
Total foreign exchange outflow during the year under review was H 774.90 crore as against H 856.08 crore during the previous year.
Industrial relations with staff and workmen across all the plants, viz. Akurdi, Waluj, Chakan and Pantnagar continued to be cordial.
At Akurdi and Chakan, periodic wage review is due with effect from 1 April 2016, as per the terms of the respective wage settlements signed for a period of nine years, in the year 2010. Both, Management and Union have exchanged their Charter of Demands/Requirements with each other.
Negotiations/dialogues to conclude the review process have commenced and are going on in a congenial atmosphere at both the locations.
The Employers’ Federation of India (EFI) conferred The National Award for Excellence in Employee Relations - 2015 on Bajaj Auto Ltd., Motorcycle Division, Waluj, Aurangabad, in recognition of 'Strong Commitment to Employee Relations', at Mumbai, on 9 December 2015.
One workman from Engine Assembly (MCD) Waluj, received National ‘Vishwakarma Rashtriya Puraskar’ from the Labour and Employment Ministry, Government of India, for the year 2013.
The employees of Chakan Plant won first prize five times in TPM Circle National Level Competition and once in National Level Champion’s Competition organised by Confederation of Indian Industry (CII). The Chakan Plant also received first prize in the Productivity Case Study Contest 2016 organised by Indian Institute of Industrial Engineering (IIIE).
The employees of Pantnagar Plant won first prize in Breakthrough Kaizen category in National Level Kaizen Competition organised by CII. Likewise, the Pantnagar Plant also received TV 100 Excellence Award for implementing various Kaizens for Energy Saving. The Award was given by the Hon’ble Chief Minister of State of Uttarakhand, Mr. Harish Rawat.
Subsidiaries and joint ventures
PT. Bajaj Auto Indonesia
Routine business operations of PT. Bajaj Auto Indonesia have stopped. In March 2016, Bajaj Auto and KTM entered into an agreement vide which Bajaj Auto will establish the KTM brand in Indonesia, the largest motorcycle market in South-East Asia.
Bajaj Auto International Holdings BV,
Netherlands (BAIH BV)
Bajaj Auto International Holdings BV is a 100% Netherlands based subsidiary of Bajaj Auto Ltd. Over the years, through this subsidiary, Bajaj Auto has invested a total of € 198.1 million (H 1,219 crore), and holds approximately 48% stake in KTM AG of Austria (KTM), the fastest growing motorcycle brand in the world. Calendar year 2015 has again been a record year for KTM, with highest sales in units and highest turnover in the history of the Company. Detailed information on the developments at the subsidiary and KTM AG is provided in the Management Discussion and Analysis Report.
Signing of anti-corruption initiative of World Economic Forum (WEF)
In support of the initiative taken by WEF, with a view to strengthening the efforts to counter bribery and corruption, your Company is a signatory to the 'Commitment to anti-corruption' and is supporting the 'Partnering Against Corruption-Principles for Countering Bribery' derived from Transparency International’s Business Principles. This calls for a commitment to two fundamental actions, viz.a zero-tolerance policy towards bribery, and development of practical and effective implementation programme.
Extract of annual return
The extract of Annual Return as provided under sub-section (3) of section 92 of the Companies Act, 2013, in the prescribed Form MGT-9 is annexed to this Report.
Number of meetings of the board
There were eight meetings of the Board held during the year. Detailed information is given in the Corporate Governance Report.
Directors’ responsibility statement
As required under clause (c) of sub-section (3) of section 134 of the Companies Act, 2013, directors, to the best of their knowledge and belief, state that
-in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;
- the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
- the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- the directors had prepared the annual accounts on a going concern basis;
-the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
- the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and were operating effectively.
Details in respect of frauds reported by auditors under section 143(12)
During the year under review, there were no frauds reported by the auditors to the Audit Committee or the Board under section 143(12) of the Companies Act, 2013.
Declaration by independent directors
The independent directors have submitted the declaration of Independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section (6).
Directors’ Remuneration Policy and criteria for matters under section 178
Information regarding Directors’ Remuneration Policy and criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 are provided in the Corporate Governance Report.
Particulars of loans, guarantees or investments
Information regarding loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 are detailed in the Financial Statements.
Related party transactions
There were no Related Party Transactions (RPTs) entered into by the Company during the financial year, which attracted the provisions of section 188 of the Companies Act, 2013. There being no ‘material’ related party transactions as defined under regulation 23 of SEBI Listing Regulations, 2015, there are no details to be disclosed in Form AOC-2 in that regard.
During the year 2015-16, pursuant to section 177 of the Companies Act, 2013 and regulation 23 of SEBI Listing Regulations, 2015, all RPTs were placed before the Audit Committee for its approval.
The Policy on RPTs as approved by the Board is uploaded on the Company’s website www.bajajauto.com
Material changes and commitments
There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this Report.
Risk Management Policy
Information on the development and implementation of a Risk Management Policy for the Company including identification therein of elements of risk which, in the opinion of the Board, may threaten the existence of the Company, is given in the Corporate Governance Report.
Corporate Social Responsibility (CSR)
Detailed information on Corporate Social Responsibility Policy developed and implemented by the company on CSR initiatives taken during the year pursuant to section 135 of the Companies Act, 2013 is given in the annexed Annual Report on CSR activities.
Formal annual evaluation of the performance of Board, its Committees and Directors
Information on the manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors is given in the Corporate Governance Report.
Presentation of financial statements
The financial statements of the Company for the year ended 31 March 2016 have been disclosed as per Schedule III to the Companies Act, 2013.
Consolidated financial statements
The directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, and as prepared in compliance with the Companies Act, 2013, applicable Accounting Standards and SEBI Listing Regulations, 2015 as prescribed by SEBI.
A separate statement containing the salient features of its subsidiaries in the prescribed form (AOC-1) is annexed separately.
The summary of the key financials of the Company’s subsidiaries (Form AOC-1) is included in this Annual Report. A copy of audited financial statements for each of the subsidiary companies will be made available to the members of the Company seeking such information at any point of time. The audited financial statements for each of the subsidiary companies will be kept for inspection by any member of the Company at its registered office during business hours. The same are placed on the Company’s website www.bajajauto.com
Details as required under the provisions of section 197(12) of the Companies Act, 2013, read with rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are placed on the Company’s website www.bajajauto.com as an annexure to the Directors’ Report. A physical copy of the same will be made available to any shareholder on request.
Details as required under the provisions of section 197(12) of the Companies Act, 2013, read with rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, which form part of the Directors’ Report, will be made available to any shareholder on request, as per provisions of section 136(1) of the said Act.
A Cash Flow Statement for the year 2015-16 is attached to the Balance Sheet.
Pursuant to the legislation 'Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace Act, 2013' introduced by the Government of India, which came into effect from 9 December 2013, the Company has framed a Policy on Prevention of Sexual Harassment at Workplace. There was no case reported during the year under review under the said Policy.
Directors and Key Managerial Personnel-changes
The Directors regret to report about the sad demise of S H Khan, an independent director of the Company, on 12 January 2016. The directors record their whole-hearted appreciation of the valuable contribution made by him during his long tenure as director in the Company.
Pradeep Shrivastava, COO, has been appointed as an Additional Director and whole-time director with the designation of Executive Director for a period of five years commencing from 1 April 2016. The members are requested to approve his appointment in the ensuing annual general meeting.
In light of the provisions of the Companies Act, 2013, Sanjiv Bajaj and Manish Kejriwal retire from the Board by rotation this year and being eligible, offer themselves for re-appointment. The information as required to be disclosed under regulation 36(3) of the SEBI Listing Regulations, 2015 in case of re-appointment of the directors is provided in the Notice of the ensuing annual general meeting.
There was no other change in the directors and KMP during the year under review.
Detailed information on the directors is provided in the annexed Corporate Governance Report.
Significant and material orders passed by the regulators or courts
During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals, which may impact the going concern status of the Company and its operations in future.
Details of internal financial controls with reference to the financial statements
The Company has documented its internal financial controls considering the essential components of various critical processes, physical and operational, which includes its design, implementation and maintenance along with periodical internal review of operational effectiveness and sustenance.
This ensures orderly and efficient conduct of its business, including adherence to Company’s policies, safeguarding of its assets, prevention of errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
The internal financial controls with reference to the financial statements were adequate and operating effectively.
Pursuant to SEBI Listing Regulations, 2015, a separate chapter titled ‘Corporate Governance’ has been included in this Annual Report, along with the reports on Management Discussion and Analysis and General Shareholder Information.
All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2015-16. A declaration to this effect signed by the Managing Director (CEO) of the Company is contained in this Annual Report.
The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17 (8) of the SEBI Listing Regulations, 2015.
Certificate from Auditors of the company regarding compliance of conditions of corporate governance is annexed to this Report.
Business Responsibility Report
Regulation 34(2) of the SEBI Listing Regulations, 2015, inter alia, provides that the annual report of the top 100 listed entities based on market capitalisation (calculated as on March 31 of every financial year), shall include a Business Responsibility Report.
Since Bajaj Auto Ltd. is one of the top 100 listed entities, the Company, as in the previous years, has presented its BR Report for the financial year 2015-16, which is part of this Annual Report. As a green initiative, the BR Report has been hosted on the Company’s website www.bajajauto.com
A physical copy of the BR Report will be made available to any shareholder on request.
Secretarial Standards of ICSI
Pursuant to the approval given on 10 April 2015 by the Central Government to the Secretarial Standards specified by the Institute of Company Secretaries of India, the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) came into effect from 1 July 2015. The Company is in compliance with the same.
Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules made thereunder, the current auditors of the Company, Dalal & Shah LLP, Chartered Accountants (registration number: 102021W) were appointed by the members at the 7th annual general meeting to hold office until the conclusion of the 10th annual general meeting, subject to ratification by members at each annual general meeting.
The members are requested to ratify the appointment of Dalal & Shah LLP, Chartered Accountants (registration number: 102021W/W100110) as statutory auditors of the Company and to fix their remuneration for the year 2016-17.
The Statutory Audit Report does not contain any qualification, reservation or adverse remark or disclaimer made by Statutory Auditor.
Pursuant to the provisions of section 204 of the Companies Act, 2013 and rules made thereunder, the Company has re-appointed, Shyamprasad D Limaye, (Membership No.1587) Company Secretary in Practice to undertake the secretarial audit of the Company. Secretarial Audit Report for the year 2015-16 issued by him in the prescribed form MR-3 is annexed to this Report.
The said Secretarial Audit Report does not contain any qualification, reservation or adverse remark or disclaimer made by the Secretarial Auditor.
On behalf of the Board of Directors,
Pune: 25 May 2016